SAN ANTONIO - A portion of the East Side might be getting a facelift if the San Antonio City Council approves a zoning change. Councilman Alan Warrick said developers are looking at improving an area near South Cherry Street and Carolina Street.

Warrick said the area will be considered the "Essex Modern City" and will include condos, apartments, restaurants, a micro-brewery and a vertical farm.

The partnership, which splits the ownership among Varga Endeavors' founder Efraim Varga and Harris Bay founders Jake Harris and Anton Bayer, closed on the 5.99-acre parcel at the corner of Essex and South Cherry streets two weeks ago and got its infill development zoning request approved in April. It has already raised nearly $6 million in its first round of financing for the project, which has the potential to include more than 1 million square feet of retail, office, multifamily, for-sale residential and parking space.

Ideas for the project, called Essex Modern City, sound more like something found in Santa Monica, California, or Seattle than San Antonio. An extreme focus on environmentally friendly products and energy efficiency, "living" garden walls and a climbing structure along the facade of the parking garage will all be built around a central courtyard — the developers' nod to European plazas.

An option to buy an additional 2 acres is also available, which Varga told me the partnership will likely close on before the end of the year.

Wow, that is looking amazing! I love the idea of incorporating the central courtyard into the project, hopefully the final design has more trees around it though.. It would be a warm place during our 9 months of summer

Does anyone have any idea the number of units they are planning to build at the site, approximate square footage of mixed-use, or how they plan to improve infrastructure in the area? It would be great if they enhance access into Lavaca and up to the Alamodome that would take advantage of the connections to Hemisfair and Downtown.

The recent surge of large-scale development in downtown San Antonio is about to spill over for the first time into Denver Heights, a neighborhood just south of the Alamodome that struggles with urban blight and crime.

Local developer Efraim Varga and investment firm Harris Bay of Sacramento, California, plan to start work by the end of the year on Essex Modern City, a $150 million mixed-use development at the crossing of Essex and Cherry streets. The first phase of the 8-acre project will transform a former pallet manufacturing site into 80,000 square feet of creative office space, 65,000 square feet of retail, 248 apartments, 160 condominiums, 80 townhomes and a food hall, the developers said Thursday.

“It’s going to be a catalyst for the neighborhood,” Varga said. “It’s going to do exactly what the Pearl did, and bring in more developers.”

The project’s first phase will take about three years to build and will cover about 5 acres, Varga said. It will be all new construction except for a small 1930s building that will be rehabilitated. The scope of the second phase will depend on the market, but the developers hope to build a condo tower between eight and 11 stories tall, he said.

Varga and his partners plan to differentiate the project from other mixed-use developments, such as the Pearl and the Lone Star Brewery, with flourishes such as a rock climbing wall, murals painted by local artists, a mobile app allowing visitors to reserve parking and “vertical farms” on building exteriors that would grow vegetables for use in restaurants.

The developers want to recruit local and Texas-based companies for the retail space, said Jake Harris, co-founder of Harris Bay. Their retail strategy is the opposite of the tack taken by the team redeveloping the Lone Star Brewery, which has signed up national chains such as Cinemark Holdings and Punch Bowl Social. The two developments, which are less than a mile apart, will complement each other, Harris and Varga said.

“I think retail space is going to struggle if it’s a chain restaurant or if it’s something the internet can take away,” Harris said. “There’s a whole lot of Starbucks, CVSes and AMC movie theaters.”

The developers are hoping to attract tech companies to lease the creative office space, Varga said, which would make the project part of downtown San Antonio’s growing tech scene. They’re in talks with other firms that would build the multifamily portion of the project.

CREO, a local architecture firm led by Kris Feldmann, is leading the design of the project.

with flourishes such as a rock climbing wall, murals painted by local artists, a mobile app allowing visitors to reserve parking and “vertical farms” on building exteriors that would grow vegetables for use in restaurants.

__________________PAVE PARADISE, PUT UP A (HIGH-RISE ON A) PARKING LOT...Kyle on Twitter

Southtown residents said they were excited when Efraim Varga, a local house-flipper turned developer, announced in 2013 that he would build 28 stylish townhomes on an abandoned trailer park on Roosevelt Avenue.

Varga said he expected to finish the project, known as The Park at Lone Star, by mid-2015, according to news reports. But the property remains empty nearly four years after the project was announced, except for a driveway and a few electrical boxes. Varga recently put it up for sale, raising the question of whether the townhomes will ever come to be.

“He had a tractor on there that we would joke about,” said Victoria Garcia, president of the Roosevelt Park Neighborhood Association. “Every time we would call him to ask him to give us an update, the tractor would move around from one side to the other to push some dirt around and make it look like something was happening.”

Some residents of Southtown are frustrated by the lack of progress Varga has made on Park at Lone Star and two other townhome projects he announced in recent years, Sunglo Urban Homes and Lotus Urban Homes. They say they’re skeptical of his ability to pull off an ambitious $150 million mixed-use development project called Essex Modern City that would bring huge amounts of office space, retail, apartments and condos to a former pallet manufacturing site in the struggling neighborhood of Denver Heights.

The project is in its early days, to be sure. Varga and his partners are just beginning to raise financing and talk to potential leasing agents; they’ve hired local architecture firm CREO to draw up schematic plans, and Big Red Dog to handle the engineering. Varga is teaming up with Harris Bay, a California investment firm founded in 2014 that flips houses in San Antonio and is building some townhomes in East Austin.

East Side leaders have high hopes for Essex, saying it would bring much-needed jobs and retail to the area. But they acknowledge that building it will be a challenge.

“A $150 million project — that’s something you don’t pull off every day. You have to have some big-pocketed investors,” said Aubry Lewis, president of the Denver Heights Neighborhood Association.

For their part, Varga and Harris Bay co-founder Jake Harris say they’ve already raised nearly $6 million, which they used to buy Essex’s 8-acre footprint last year, with enough left over to pay for architectural plans. They’re confident they can raise the rest by partnering with other developers, taking out bank loans and by receiving local and federal subsidies. Construction will be easier because Essex won’t be in a historic district, they said.

RELATED: East Side to receive $150 million Pearl-like development

“We have millions and millions of dollars invested into this … The retirement accounts, the people we put behind this, is what’s really going to get this project done,” Harris said. He added, “We’re hoping that this is a big enough project that the city helps us move quickly through the process, sort of like they’ve done with other projects coming online now.”

The city has allotted about $877,000 in incentives for Varga’s townhome projects in Southtown, according to the Center City Development and Operations Department. He has received about $213,000 of that so far — $205,400 for Sunglo and $7,500 for the up-for-sale Park at Lone Star. The Park at Lone Star incentives included fee waivers and funds for an environmental assessment of the site.

Varga said in an interview that his townhome projects have been delayed because of unexpected roadblocks that are typical in construction projects. He noted that other Southtown projects such as SOJO Urban Development’s Cedar Street Townhomes have also taken a long time to get off the ground.

“My projects are not delayed because of financing or my capability to do them,” he said. “If my projects are delayed, it’s because of neighborhoods, code enforcement, zoning. Every developer goes through these.”

Sunglo, on South Presa Street, had a well-publicized groundbreaking in fall 2015 attended by U.S. Representative Lloyd Doggett. Varga said at the time that he hoped to finish the homes by December of last year, according to news reports. Nothing has been built yet, although workers have laid the groundwork for utilities and a driveway.

Varga said that after he applied for construction permits the city told him the project would violate height restrictions, so he had to go before the neighborhood conservation district to get permission. Harris Bay partnered with him on the project after a previous investor was cut out of the deal because he wasn’t producing enough financing, he said. Construction is expected to wrap up this fall, he said.

Another townhome project across the street from Sunglo, Lotus Urban Homes, was also announced in fall 2015 and has yet to break ground.

With Park at Lone Star, Varga said he wasn’t aware when he bought the site in 2013 that it was above an old SAWS sewer line that serves only a few homes. Now, SAWS expects him to reroute the line, he said.

“It’s not my responsibility at all,” Varga said.

Anne Hayden, a spokeswoman for SAWS, said Varga signed a utility service agreement in 2014 stating that he would bear the cost if he wanted to move the sewer line before SAWS decided to replace it. Varga only asked SAWS to pay to move the line after realizing that their plan to move it wouldn’t work, she said. He disputes that he signed such a document.

Varga said he decided to put Park at Lone Star up for sale so he could focus on Essex. He doesn’t plan to sell Sunglo or Lotus, he said.

“If I could get some of these off the table and focus on that, that would be ideal,” he said. “If not, we’re just going to build it out ourselves.”

Collaborative Homes, Varga’s company that owns some of his properties, is almost two months behind in paying about $10,700 in property taxes owed for the Park at Lone Star and $6,715 for Sunglo, according to the Bexar County Tax Assessor-Collector.

Varga — who was born in Hungary but moved with his family to California at age six — has always wanted to become a developer, he said. His father and grandfather worked in construction, and he got his start as a construction manager in his father’s company, he said. During the housing crisis, he decided to move to San Antonio after doing research on cities that were holding up well economically.

Since moving here, Varga has bought, fixed up and sold at least a dozen homes, property records show. Local residents who bought the homes say they were happy with his work. Shana Robles, who bought a home from him last year, recalled that he hauled away a dead tree in her back yard even though he didn’t have to.

Varga and Harris said they’re confident in their ability to finance the Essex project, which would include 80,000 square feet of creative office space, 65,000 square feet of retail, 248 apartments, 160 condominiums, 80 townhomes and a food hall, as well as spectacular amenities such as a climbing wall and vertical farms. Harris Bay is leading the financing effort, especially its co-founder Anton Bayer, who has a background in finance and founded the investment firm Up Capital Management.

The team has met with Frost Bank and other local banks to discuss construction loans for the project, Varga and Harris said. They’re looking for another developer to build the project’s multifamily portion.

Essex’s development team is also considering financing the project through the federal government’s EB5 program, which allows foreigners to gain residency in the U.S. by investing in programs that create jobs, Harris said. They plan to apply for city incentive programs, and they hope they will be eligible for federal incentives because the project is within the Eastside Promise Zone.

Jackie Gorman, executive director of San Antonio for Growth on the Eastside, said she’s hopeful that the project will come to fruition. She noted that Varga and his partners have already spent money in the neighborhood.

“I’m a little more confident in this project than others that (developers) have talked about,” Gorman said. “They bought land. That’s more than a lot of other people have done. They’ve actually spent some dollars.”

My idea is an expansion of an idea I saw in the Express News. I apologize for not remembering the author. So full disclosure on where the idea came from.
I read an article several months ago regarding the Alamodome and UTSA tailgating and how it could be a better experience. The gist of the story was to connect the parking lots by building an elevated pedestrian causeway over the railroad tracks to facilitate the movement and interaction of people. I recommend expanding the thought and connecting the Hays Street Bridge to the Alamodome to the new proposed 7.7 acres development at Cherry and Essex (Essex Modern City). This elevated linear park could be similar to the High Line park in NYC and serve as a further conduit of growth to the near east side if done right. Imagine an “elevated river walk” if you would. Please find a link to the NYC High line for reference. www.thehighline.org
It would provide a third North South park in the Downtown Area (San Pedro Creek/Riverwalk/East Side Elevated). From Hays Street Bridge to River walk is 4 blocks along 8th street. From Essex Modern you could run a bike lane/walking trail along tracks to Mission Reach Portion of River Walk.